Health-Care Reform in Cross Hairs: Could It Survive Without Individual Mandate?

Washington - Supporters of President Obama’s health-care reform are holding their breath as legal challenges to the individual mandate – the requirement that by 2014 virtually every American purchase health insurance or face penalties – work their way up to the US Supreme Court.

The mandate, they argue, is essential to creating a big enough pool of healthy individuals to cover the insurance industry’s rising costs, because the law requires that insurers take all comers, regardless of preexisting conditions.

But Howard Dean, for one, isn’t so concerned. At a Monitor breakfast Wednesday, the former national Democratic chairman and former governor of Vermont called the mandate “unnecessary.” Mr. Dean, who is also a physician, cites his state’s experience nearly 20 years ago in getting most children under 18 insured, without a mandate.

At the federal level, Dean says, “I don’t think the mandate is unconstitutional, but i don’t care if it is or not.” Already, the law allows young adults up to age 26 to be covered on their parents’ policy, which takes care of a demographic group that was least likely to have insurance. There are other ways to incentivize people to buy insurance, he says.

One way is to have an annual enrollment period, as with employer-provided health coverage, such that people can purchase insurance only during a limited time window. That would prevent people from buying insurance only after they become sick or have an accident. They would have to pay their health expenses out of pocket.

“If something bad happened to you, you could be forced into bankruptcy,” Dean says. “That would wake some people up.”

Another system that encourages opting in is used for enrollment of seniors in Medicare Part D, prescription drug coverage. People who do not sign up as soon as they are eligible are assessed a surcharge when they do enroll.

The key to encouraging enrollment in a health plan is affordability, Dean says.

“The truth is, even if you did nothing [if the mandate is struck down], the vast, vast majority of people are going to sign up for [insurance] if it’s affordable,” Dean says. “The president was right during the campaign when he said so.”

Other advocates of Obama’s reform aren’t so sure there would be such near-universal buy-in without a legal mandate.

“If you want to protect people who currently have insurance from having their premiums increased significantly, you have to ensure that the pool is broad enough,” says Ron Pollack, executive director of Families USA, an advocacy group for health-care consumers.

Methods besides a mandate could work to expand the insurance pool, “but they are less tried than an individual-responsibility provision,” Mr. Pollack says, using the administration’s term for the unpopular mandate. “It’s already been tested in Massachusetts and worked very well.”

A requirement to insure all comers without the mandate would produce “skyrocketing costs,” says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, a lobby group for insurers.

If the Supreme Court strikes down the individual mandate, pressure would be intense for Congress to act. Ed Haislmaier, a health policy researcher at the Heritage Foundation, sees multiple flash points in the reform that could spark action in Congress – beyond the current symbolic effort at repeal and even before any Supreme Court ruling on the mandate. (The possible cases are still in lower courts.)

The Obama administration and the Democratic leaders in Congress “are in a very difficult position politically, trying to defend this and at some point something is so bad that Congress has to actually go in and fix it,” Mr. Haislmaier says. “At that point the question is, why not the rest of it? And it’s like the dam breaking.”

Last month, Virginia federal district judge Henry Hudson found the individual federal mandate unconstitutional. “At its core, this dispute is not simply about regulating the business of insurance – or crafting a scheme of universal health insurance coverage – it’s about an individual’s right to choose to participate,” Judge Hudson wrote.

Hudson rejected the challenge to the entire statute, striking down only the mandate.

Dean says the mandate’s unpopularity with the public reflects the libertarian nature of this country. “That’s why the individual mandate I think is doomed – whether it gets thrown out in court or thrown out in the legislature or just ignored,” says the former Democratic chairman. “Americans can’t stand to be told what to do, no matter what party.”